Landlords are warning that potential tax rises in the November Budget could significantly impact rental supply, profitability and confidence across the private rented sector. New polling suggests the proposed National Insurance levy on rental income is already shaping investment decisions, with many reassessing whether staying in the sector remains viable.
Growing concern as Budget speculation builds
Fresh analysis from Pegasus Insight shows rising anxiety among landlords, with eight in 10 respondents describing the proposed 8% National Insurance charge on rental income as “very concerning.”
Mark Long, founder and director of Pegasus Insight, said the financial pressure is now seen as equal to regulatory burden:
“The tax burden is now seen by landlords as every bit as threatening as regulation. The possibility of a new National Insurance charge on rental income is causing alarm across the sector, not just because it would erode profitability, but because it would further undermine confidence in what has already become a heavily taxed form of investment.”
He added that another intervention following the Renters’ Rights Act and Capital Gains Tax speculation risks destabilising the rental market at a critical moment.
“Every indication from our data is that a growing number of landlords are reassessing their position. If the November Budget adds yet another layer of taxation, we can expect more to exit the market in 2026, further reducing rental supply at a time of rising demand.”
Landlord sentiment shifting as possible capital gains tax changes loom
Concerns go beyond National Insurance. Pegasus found three-quarters of landlords are worried about further Capital Gains Tax changes, rising to 85% among those considering selling or who have already sold stock.
The research suggests the shift is not theoretical: 40% plan to sell at least one property in the next year, while only a small number intend to expand.
A survey comment from one Midlands letting agent, shared publicly last week, reflects a growing sentiment:
“Landlords aren’t emotional about this anymore – they’re analytical. If the numbers stop working, they’ll move on, and tenants will be the ones competing harder.”
Calls are increasing from landlord bodies such as the NRLA for the Chancellor to pause additional taxation until rental supply stabilises. UK Finance has also warned in previous market updates that mortgaged landlords are still adjusting to higher interest rates and affordability testing.
Commercial reality: Preparation over panic
While speculation will continue until the Budget is delivered, experienced landlords are already preparing for different fiscal scenarios rather than waiting to react under pressure.
Many are now reviewing portfolio structure, ownership models and refinancing timelines, particularly where fixed-rate mortgages expire in 2025-27.
Some investors also see opportunity. Property accountants note that selective disposals and reinvestment into higher-yield markets or limited company structures may mitigate tax exposure if policies change. Others are examining new investment areas such as energy-efficient refurbishments where government support could align with regulatory compliance.
The next six months are unlikely to be calm, but they can be strategic.
